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Last Updated on 22 April 2019

How Much Does Life Insurance Cost?

Life insurance is an important investment in protecting your financial security in the future. If you pass away, you do not want your family members to be left without the funds they need to pay housing costs, educational expenses, and other bills to maintain their quality of living. If you become unable to work or have a critical illness, you also do not want to face financial ruin or be forced to try to keep working even with serious health problems. A life insurance policy with a death benefit, critical illness insurance, and income replacement insurance can all protect you from these financial disasters – but you need to pay for a policy before you get sick.

While it is a smart choice to purchase life insurance, you may be concerned about the cost of coverage. The good news is, you can usually get life insurance for little or nothing out of pocket.

How much does life insurance cost?

The cost of life insurance varies from person to person. A 34-year-old male who does not smoke who obtains a $100,000 policy, for example, could pay under $3 per week for coverage while someone who has a higher death benefit or who is older or who smokes could expect to pay more. Because there are different variables affecting the cost of life insurance cover, you will need to get a personalized quote in order to determine what your policy should cost you.

What factors determine how much life insurance costs?

Factors that determine the cost of life insurance include your age at the time you obtain your policy; whether you smoke or not; the types of coverage you wish to obtain; and the amount of coverage that you wish to obtain. You can expect to pay more if you have a significantly higher death benefit or if you smoke cigarettes or are older. If you are young and healthy, you can typically get a very affordable life insurance policy.

Will the cost of a policy change over time?

Whether the cost of a policy changes over time or not depends upon whether you buy a policy with stepped or level premiums.

If you purchase coverage with stepped premiums, premiums increase gradually as you age. Most people opt for a stepped premium policy because they get more affordable coverage when they are young and their incomes are lower. A stepped policy also means you pay for the specific level of risk associated with your age at the time of coverage.

If you buy a policy with level premiums, on the other hand, your premiums will remain constant- usually until you are 65. This means you can always know exactly what you will be paying for coverage and you can benefit from the security of knowing in advance what your premiums will be for the entire time the policy is in effect.

Will you pay more for a policy if you smoke?

You can expect to pay more for a life insurance policy if you smoke cigarettes. The life insurer may request you undergo a medical examination to determine if you have any conditions or complications associated with smoking. If you quit smoking and buy coverage, you usually will be given the same rate as a non-smoker as long as at least 12 months have passed since you stopped using cigarettes. You must be honest about whether you smoke or the insurer can rescind your policy.

Do pre-existing conditions raise the cost of a life insurance policy?

If you are diagnosed with a medical condition and do not have a guaranteed-renewable policy in place already, it may be difficult for you to get life insurance. If you do qualify for coverage, you can expect to pay more if your pre-existing condition increases the risk of death or illness.

Will seniors pay more for life insurance?

Life insurance gets more expensive the older you get, because there is a greater risk that you will get sick or pass away. There are insurers that cater policies towards seniors and you may wish to get quotes from these providers to determine if the costs are lower.

Does life insurance cost the same amount from different insurers?

Different insurance companies charge different premiums even for the same individual and the same level of coverage. Because there can be substantial differences in costs, it is important to comparison shop to try to find the best deal. However, you should not decide on coverage based solely on price. Be sure to compare the terms and conditions of the policy, the benefits amounts, and what the policy covers, so you can get the overall best deal.

Can I avoid paying out-of-pocket for life insurance?

You should be able to buy most types of life insurance coverage from the money in your superannuation fund. This means you can avoid paying anything out-of-pocket to get coverage.

Can I afford life insurance?

Because life insurance is low-cost when you are young, it is a good investment to buy it and you will not need a lot of money to purchase a policy. Since you can generally pay for life insurance out of your super fund, you may not have to reduce your other spending or do anything at all to find room in your budget for a policy.

Even if you do decide to pay for the policy directly, making an investment in a life insurance policy is smart financial planning. You cannot afford not to have life insurance if you are dependent upon your income and need to have money coming in if you become disabled or are critically ill. If you have any family members depending upon you, you also need to have a policy to protect them. Shop around today to explore options for affordable coverage so you can make sure you and those you care about are provided for.

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